자원·환경경제연구 ISSN:1229-9146(Print) Environmental and Resource Economics Review

This study analyzes how the twin burden of competitiveness erosion and trade measures faced by Korea’s heavy and chemical industries affects national greenhouse gas reduction targets. Using an integrated assessment model, we represent competitiveness erosion as a structural decline in demand for heavy and chemical industrial output, and trade measures — the EU Carbon Border Adjustment Mechanism (CBAM) and U.S. Section 232 tariffs — as price increases for affected industrial products. We then assess their effects on emissions and carbon prices, and evaluate transition policies in the iron and steel sector that expand hydrogen-based direct reduction ironmaking and scrap use. Results show that industrial emissions in 2035 fall by 37–41% under the twin burden, exceeding the industrial-sector reduction implied by the NDC by around 10 percentage points. However, this reduction is driven by production contraction rather than industrial transition. Although contraction lowers carbon prices in the near term, it delays the transition to low-carbon technologies and raises carbon prices after 2039–2043. By contrast, even under the twin burden, transition policies in the iron and steel sector further reduce emissions while maintaining output, creating 17–52 MtCO₂e of cumulative emissions headroom for other manufacturing over 2030–2050.